Over the course of two decades, Alexander Cockburn and I wrote dozens of articles on the political corruption of Bill and Hillary Clinton and their cronies in DC and Arkansas. In many ways, those years represented the golden age of political journalism, with a fresh scandal ripening each month. As Hillary cruises toward the Democratic nomination, if not the White House, it’s time to dig into the Clinton Files and resurrect the stories of sleaze, malfeasance and transgression from that feculent decade. — JSC

Here’s just one case Clintonian corruption, which I wrote about in The Nation in 1994, where Mrs Clinton and her law firm were central to a vast and methodical scheme of profiteering, gouging taxpayers and, above all, the defenseless residents of nursing homes in four states, including Arkansas.

JoAnn Wypijewski and I reconstructed the story with the help of Roy Drew, a private stock analyst working in Little Rock, who unearthed the scandal.

Nursing home rip-offs and the Rose Law Firm led us not only to Hillary Clinton but to other familiar White House names, most prominently associate White House counsel William Kennedy; also to the money machine set up by Bill Clinton when he was still Governor of Arkansas–the Arkansas Development Finance Authority, whose former chief was later ensconced in the US. Agriculture Department, having informed us often enough in 1992 that he was a man totally independent of the Governor.

Bill sat in the Governor’s mansion in Little Rock, ultimate arbiter of the pools of money that could be dispensed by ADFA in the form of long-term loans financed through the sale of tax-exempt bonds. A few blocks away sat his wife, in the law firm setting up deals, that called on that money. The world of Bill and Hill, disclosed by the saga of Beverly Enterprises, one of the largest owners bf nursing homes in America and until January of this year part of the vast investment portfolio of Arkansas’s Stephens Inc., offers us important truths about the present incumbents of the White House. When questioned about the Whitewater/Madison Guaranty imbroglio, the First Couple sought to give the impression of a pair of babes, venturing a modest investment and left with nothing to show but red ink.

This is nonsense. Far from being hayseeds in a Southern backwater, Bill and Hillary were players in the politico-financial fast lane. Sometimes the advocates of single-payer health insurance wonder why self-styled populists like Bill and Hillary opted for “managed care,” a honeypot for insurance companies and law firms. The story of Beverly Enterprises opens a window to understanding.

In 1989, with debts of $850 million, Beverly Enterprises was facing bankruptcy. Its strategy for survival was to sell off some of its 845 nursing homes throughout the country as quickly as possible for as much as possible. Forty-five of those homes were in Iowa, and in August of 1989 Beverly sold them to Ventana Investments, a company owned by a man named Bruce Whitehead, an entrepreneur/hustler from Amarillo, Texas.

But Whitehead didn’t make a straight deal. He also set up a charity called Mercy Health Initiatives, whose nonprofit status he used to wheedle $86 million in tax-exempt bonds out of the Iowa Finance Authority. When Whitehead approached the authority for the money, he insinuated that if the state did not comply he would pulI out of the deal and the nursing homes would most likely close, tossing some 3,000 old folks out of their beds.

The state came through with the money. Whitehead said he needed to buy the homes, and Mercy Health threw in $6 million in promissory notes for fees to Whitehead and the underwriters, bringing the tab for the deal to $92 million. This transaction gave Beverly an immediate cash infusion of $10 million. It landed Whitehead a profit of $6.5 million, personal ownership of four homes worth $1.8 million and a $5 million contract for a construction company he owned.

As an Iowa District Court later determined, Whitehead had grossly inflated the value of the homes; which were actually worth $47 million. And while he and Beverly skipped off with their profits (Whitehead no longer has any tie to the homes), Mercy Health was burdened with debt that added as much as $6 million a year to the cost of health care at the homes. This in turn was shouldered by the old people, who saw their daily charges go up by as much as 14 percent. Mercy Health was itself less a charity than a shell, an entity that Iowa Judge Gene Needles said “served no legitimate purpose and was used primarily to obtain tax-exempt financing, shield the parties using the facilities from liability and obligations as owners and evade the payment of property taxes.” He also called Beverly and Whitehead “unconscionable” profiteers.

Judge Needles made that statement on September 13, 1991, in a ruling favoring Iowa state tax assessors who had challenged Mercy Health’s tax-exempt status. He was upheld in that opinion by the Iowa Supreme Court on May 19, 1993, two months before Vince Foster died and around the time Hillary Clinton was blasting sectors of the health care industry for their “unconscionable profiteering.”

Foster and H.R.C. are not incidental to the story. Rose Law was up to its neck in the Iowa deal, and was contriving exactly the same outrageous piracy in Little Rock itself in 1989. In fact, Rose Law was responsible for putting together Beverly four-state bid to dump nursing homes, each case involving Whitehead and all similarly designed to get fast cash to the ailing company. If all four deals had gone through, the total transaction would have been worth $300 million, according to internal company documents disclosed in the discovery process for the court action in Iowa. Perhaps $3 million of that would have gone to Rose, with a sizable portion distributed among its partners: Foster, Kennedy, Web Hubbell and Hillary Clinton among them.

The company documents provide a projected schedule of how the deals were to have happened: in July of 1989, Arkansas; in August, Iowa; in September, Nebraska; and in October, South Dakota. Arkansas was to have been the first because, as Drew reasons, “that’s where the political juice was.” But all of Rose Law’s manipulations in this arena were a secret in Arkansas in 1989. An election year was coming up, and newspapers there had long been in the habit of swiping at Hillary and her Rose colleagues for profiting from their association with the Governor.

Sheffield Nelson, already announced as an opponent of Clinton for the governorship, would have had rich sport pointing out that the Governor’s wife and friends stood to gain handsomely from brokering an $82 million ADFA bond deal over Beverly’s nursing homes. The Arkansas deal alone represented perhaps $800,000 to Rose Law. So on paper in Arkansas, Beverly was not represented by Rose Law but by Joe Giroir, formerly a managing partner of the firm but at the time in his own practice. In all the papers for the ADFA deal, Rose Law is never mentioned as Beverly’s attorney, even though the documents discovered through legal action in Iowa clearly show Rose Law, and William Kennedy, specifically, as handling both deals.

The deal in Arkansas was structured just as it was in Iowa: Beverly was to sell its nursing homes via Ventana to Pride House Health Care, a charity created by Whitehead with no employees, no working assets and an appointed board of three people. To finance the deal, Whitehead went to ADFA for the $82 million in tax-exempt bonds.

ADFA had been set up by Clinton in 1985 ostensibly to stimulate development and in- vestment in Arkansas. A prototypical piece of “remaking government,” it was a private corporation that operated within the state structure. Clinton appointed the board, which served at his pleasure-but without accountability to the taxpayers and without oversight by the Federal Reserve, F.D.I.C. or any out- side government authority.

On the ADFA board in 1989 was James Stobaugh, who was then the president of Worthen Bank in Pine Bluff, Arkansas. Also on the board was Bobby Stephens, no relation to the scion of Stephens Inc., Jackson Stephens, but nicely positioned as an executive vice president of Beverly Enterprises. Neither Stobaugh nor Stephens recused himself from the vote to issue the bonds to Pride House, a vote that was unanimous. As Drew says, “The whole thing had to be wired for a guy from Amarillo to walk into Arkansas and get them to vote unanimously on an $82 million bond deal.”

As it happened, the Arkansas deal that should have gone so smoothly hit the skids. First, there was a shift in underwriters, throwing off the deal’s timing and extending its process. Second, Drew discovered Beverly’s prospectus to ADFA and started asking questions about why a middleman who had nothing to recommend him and who had set up ‘a company that was clearly a shell should be the beneficiary of state largesse. Drew didn’t know at the time that Rose was representing Beverly, but he knew that the conflicts of interest in the Stephens-Beverly-ADFA nexus were thick, and the Arkansas Democrat-Gazette started pounding away at the story.

Through it all, Bill Clinton said nothing. It was not until the state’s attorney general accused Beverly of offering him a $100,000 bribe that the deal fell through. In December of 1989, Clinton was forced to nix the ADFA loan and made a statement about how Beverly et al. “tried to milk us like an old, full cow.”

Of course, back in ’89 when Clinton was using his home- spun rhetoric io present himself as the state’s guardian against corporate exploitation, he never let on that Rose Law was the forward guard for those exploiters. Since then, he and Hillary and anyone else who’s asked from the firm have stonewalled questions about the case. Drew makes an apt observation: “The Rose Law Firm put this thing together, and if they were proud of what they were doing, why did they hide behind Joe Giroir?”

Just how much money Rose Law and its partners like Hillary stood to gain from these various deals affecting the health care of thousands of old people is a matter of speculation; as noted above, it might have been $3 million on the $300 million deal as originally envisaged.

Drew says, “If you need money and I’m a money finder and I’m working for you, I’m going to take a point–that’s 1 percent–at !east, for finding you the money. Rose worked in Arkansas for a long, long time on these deals. They had to work on all four simultaneously, learn the law in all the states and figure out their strategies for each; and they weren’t working for free. For some point of comparison, think of this. When Rose was working for the F.D.I.C. against Frost & Co., which had put together inaccurate audits on Madison Guaranty, they obtained a settlement of $1 million for the government. Their fee on that was $400,000. My understanding is that they separate these fees among the partners. If Hillary Clinton made a buck–if she made even one dollar on those nursing home deals–she shouldn’t be on the stump talking about unconscionable profits.”